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SYLVIE DOUGLIS, BYLINE: NPR.
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STACEY VANEK SMITH, HOST:
This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith. It is Friday, which can mean only one thing. It is time for indicators of the week. This week, we are talking to retail analyst Sucharita Kodali with Forrester and Adam Sharp, a cryptocurrency consultant with HIVE Blockchain Technologies. After the break, China's crypto crackdown, the shortage of retail workers and how to keep your cool if you have invested in Bitcoin.
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VANEK SMITH: Hey, everybody. It's time for indicators of the week. Today, I am talking to retail analyst Sucharita Kodali and Adam Sharp, a cryptocurrency consultant. Adam, we're going to start with you. What is your indicator of the week?
ADAM SHARP: Well, I mean, it's got to be the Bitcoin network. Roughly half of the entire mining capacity of the network is offline right now due to what's happening in China with the bans.
VANEK SMITH: Right. China has basically started to signal that it's going to maybe be cracking down on cryptocurrency. And it's had a huge effect on the price of cryptocurrency, or seems to have.
SHARP: Yeah. And there's so many factors at play here. You know, China has banned Bitcoin many times before, but this time it's looking pretty serious.
VANEK SMITH: And mining for Bitcoin, just to get very, very basic, you basically have computers doing very complicated equations.
SHARP: Exactly.
VANEK SMITH: And it's - and once they solve them, they get, like, a Bitcoin.
SHARP: Yeah, exactly. And this is what secures the entire network and makes it resistant to attacks and cheating. So as of April of last year, 65% of the entire Bitcoin network was in China. Chinese miners have done a great job for the first 10 years of Bitcoin's life. They've really been the infrastructure that supported Bitcoin. But one of the primary criticisms of Bitcoin has always been that the mining is so concentrated in China. You know, they have access to really cheap power. They have a lot of technical talent. So essentially we're seeing an exodus now. A lot of that mining equipment, the actual computers, it's going to move west. So it's going to move to places like Kazakhstan, Eastern Europe. In the end, it's going to be a good thing for Bitcoin. The network should be fine. It might be a little bit slower than usual, but I don't think it should affect the Bitcoin network overly much.
VANEK SMITH: I mean, the price of Bitcoin has dropped a lot. Like, it's lost, like, half of its value or something like that in the last few months.
SHARP: Yeah. So it was up around 64,000 a few months ago, and today it's around 34,000.
VANEK SMITH: Like, for one Bitcoin was 64,000.
SHARP: Yeah, yeah.
VANEK SMITH: Do you own Bitcoin?
SHARP: I do own some Bitcoin. So we're down almost - a little over 50% from our all-time high. But if you go back a year, we're still up 7x. If you go back two years, we're still up 12x or whatever it is. So, you know, if you stretch out your time horizon, you can see that the network's still growing. I think it's still healthy.
VANEK SMITH: But, like, as a person who is in this world and owns Bitcoin, how do you deal with this volatility? I mean, if the dollar lost half of its value in three months, people would be freaking out.
SHARP: You almost have to detach your, you know, emotions from this because if you're watching the price all the time, it's really just going to be hard on you. You're probably going to end up selling at the wrong time. So you really just have to kind of try to close your eyes and pretend that these massive swings aren't happening.
VANEK SMITH: Do you have, like, coping mechanisms that you've learned?
SHARP: The fetal position. Yeah, just crawl up in the fetal position and cry for a while.
VANEK SMITH: (Laughter).
SHARP: No. I think after a while you just get used to it.
VANEK SMITH: I mean, Sucharita, you deal in retail. But retail, I feel like, is more and more kind of linking up with crypto. I feel like - do you see retailers kind of embracing cryptocurrency more?
SUCHARITA KODALI: I think retailers are lemmings, and they go chase whatever is the hot, new, sexy thing. And at this moment in time, it's Ethereum and Bitcoin. I had one of the largest retailers in the country reach out to me the other day asking, you know, what's the deal with NFTs, and how can they affect my business?
VANEK SMITH: Really?
KODALI: Yes, which are not these non-fungible tokens. I mean, they're basically - I would essentially describe them as, like, a serial number on a - you know, that you can attach to anything. It could be a digital good. It could be, you know, a physical good.
VANEK SMITH: A lot of them are photos or, like, little sports videos or a big one. Yeah.
KODALI: But this is a retailer that literally sells leggings. And I'm like, NFTs - not necessary for your business. Go figure out how to, you know, kind of sell more leggings. Like, that's your - you know, they're hot right now. That's the one thing people want to buy, you know, kind of lean into that. Please, not NFTs. So to your point, I do think it's a lot of chasing the bright, shiny object.
VANEK SMITH: Wow. OK, enough about NFTs, though. Adam, back to Bitcoin, what do you think is going on? Why is China uncomfortable with cryptocurrency? Why is it sort of making little signals that it might ban it or regulate it or something?
SHARP: Yeah, that's the big question right now. In the official statement they released, they said it was about, you know, investors speculating on these assets and risking their livelihoods and stuff.
VANEK SMITH: Isn't China kind of framing this as, like, by not using Bitcoin, we're saving the planet because of all the massive amounts of energy that are used to mine Bitcoin?
SHARP: So a lot of people are pointing to their climate targets, their carbon targets. I suspect that a lot of what's at play is, you know, China is about to release their own digital currency, their CBDC central bank digital currency. So it's a digital version of the yuan, and they may not want private market competition from something like Bitcoin. So, yeah, it's a big question mark. I'm not sure what's really driving it, but it looks like this crackdown is not like the previous ones where people kind of eeked (ph) around and got special permits. It looks like they are literally moving almost all their mining equipment out of the country.
VANEK SMITH: What are you doing? Are you, like, holding? Are you, like, buying? Is this like a big buying opportunity?
SHARP: I'm just kind of holding. I've just kind of already got my allocation, and I'm just kind of sitting on it and trying to pretend it doesn't exist.
VANEK SMITH: Fetal position.
SHARP: Yes.
VANEK SMITH: If all else fails, the fetal position.
OK, Sucharita Kodali, retail consultant with Forrester, what is your indicator of the week?
KODALI: The most recent Bureau of Labor Statistics data suggested that a lot of retail workers have been not working or not interested in working.
VANEK SMITH: Companies can't find workers, they say. I mean, this is all across the country where - it started with restaurants, and it seems to have, like, kind of expanded.
KODALI: Right. And why this has happened, I would argue, and I think a lot of people in the services sector would say, is that it's driven by fairly generous stimulus payments that came earlier in the year and seem to be on the docket for the next several months. You know, if you - you don't want to be in those jobs. Those jobs are not necessarily high-paying, and they're a lot of hard work. And if you can avoid those, I think that a lot of workers probably will until they can't. And that point of not being able to avoid them will probably come for different workers at different phases over the next few months. But it could be as early as the summer, and it could be as late as the fall.
VANEK SMITH: I mean, it is - it has become this little bit of a flashpoint over what is going on here. Like, a lot of economists on the left are saying that the issue is that wages have been too low and that wages need to go up for these jobs. On the right, there's a lot of talk about how it's the expanded unemployment benefits that are causing the problem, that they need to expire. A lot of states have discontinued the expanded unemployment benefits that were put in place by the CARES Act. I know you talked to retailers all the time. Like, what are you hearing from them?
KODALI: Retailers are investing a lot in automation and in technology because they absolutely foresee that wages are going to go up. I think that in most urban areas, definitely there is already movement toward $15 an hour wages, and that will likely be prevalent in most regions in the future. And you can feel it a lot in the economy because you see so many physical establishments saying that they can't find work or, you know, they cut back their hours or whatever the case may be. That becomes a visible signal to the rest of us that something is amiss. It's unfortunate timing that this labor crunch is happening now because I suspect in the fall, we won't be having a labor crunch. But there may not be as much consumption at that point in time either.
VANEK SMITH: Adam, Sucharita, thank you so much for bringing us your indicators of the week.
KODALI: Thank you, Stacey.
SHARP: Thanks. It was great.
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VANEK SMITH: We would love to hear your indicator of the week. Send us a voice memo. We would love to hear it. You can send that to indicator@npr.org.
This episode of THE INDICATOR was produced by Brittany Cronin and Julia Ritchie (ph), with help from Gilly Moon. It was fact-checked by Michael He. THE INDICATOR is edited by Kate Concannon and is a production of NPR.